Conservatives Push for Greater Oversight on IRS Rules

Conservative groups and several GOP lawmakers are pushing for more oversight of IRS rules as the agency works to carry out President Trump’s new tax law.

They are calling for the agency’s tax regulations to be subjected to greater review from the Office of Management and Budget (OMB). They also want the IRS to conduct cost-benefit analyses of regulations to determine how they will affect the economy.

They argue that doing so would improve the quality of the rules and subject them to the same type of oversight that is the norm for other federal agencies.

“The IRS must live by the same rules of administrative law and agency oversight as the rest of the Executive Branch,” a coalition of conservative-leaning groups — including the Cause of Action Institute, Americans for Tax Reform, the National Taxpayers Union and groups associated with conservative donors Charles and David Koch — wrote in a recent letter to Trump and other administration officials.

But former Treasury Department officials defend the exemption that applies to most IRS rules. They say the OMB lacks the technical expertise necessary to understand tax rules and warn that reviews from the office would slow down the regulatory process at a time when guidance is desperately needed.

“Why would you slow the process down? Why would you inject people into the system who don’t know what they’re doing?” asked Greg Jenner, a partner at Stoel Rives who worked at Treasury during both Bush administrations.

IRS rules, for the most part, do not go through the OMB review process or receive a cost-benefit analysis. A memo issued in 1983 largely exempts IRS rules from being subject to OMB review. Additionally, the IRS has said that its rules generally don’t have an economic impact, as they are only implementing laws passed by Congress.

Conservative groups said they would like to see the 1983 memo withdrawn.

Treasury Secretary Steven Mnuchin told reporters last month that he and OMB Director Mick Mulvaney are working closely together on the tax law.

“To the extent that it makes sense to reconsider how things have been done over the last 30 years, we’re already doing that,” he said.